Vermont Law School recently stripped many of its tenured faculty of tenure. A recent article in Forbes by Mark Cohen, a lecturer at Northwestern, claims that Vermont's financial problems are a sign that tuition is too high and student debt is unsustainable.

The data doesn't support his contention. When student debt levels are unsustainable, student default rates are high. But at Vermont--and at most law schools--default rates are low. Vermont Law School's 3-year cohort default rates over the last 3 years available (classes of 2012-2014) are between 0.3 and 1.2 percent, while the national average cohort default default rate across educational institutions is close to 11.5 percent. Nor are Vermont graduates defaulting in large numbers on their Perkins loans. The 2016 default rate, the most recent available, was 3.5 percent for Vermont, versus an average across all educational institutions of around 11.5 percent. Perkins loans are not eligible for Income Based Repayment, so Vermont's relatively strong performance is likely not due too a disproportionately large share of its graduates enrolling in IBR. (Not all Vermont grads will practice law in Vermont, but lawyers in Vermont are actually paid reasonably well--around 120,000 on average according to the BLS).

Vermont Law School's problem is not that tuition is so high that student debt levels are unsustainable relative to students' post graduation income and other financial resources. Rather, Vermont's problem seems to be that there are too few students, and because of aggressive tuition discounting intended to attract them, the students who matriculate are paying too little to make the school financially healthy. Vermont Law School's 2016 529 shows that around 90 percent of incoming students received some scholarship, and half of students receive half tuition scholarships or better.

Vermont Law School could try to respond by offering even more scholarship, but its competitors have deeper pockets, and can outspend Vermont until it runs out of room to maneuver. Escalating a price war that Vermont will surely lose would be foolish. Degrading the quality of its education by relying on more lecturers and adjuncts risks causing a death spiral in which quality, enrollments, reputation, and revenue per student all continue to drop.

To be successful and sustainable in the long run, Vermont may need to find a way to attract students--not just from Vermont, but from across the region--other than offering a cut-rate price. Rather than compete on price, Vermont should find a better way to reach out to those students who are most likely to find Vermont's offerings appealing.